9/11/2007 – Will History Repeat?

Every time I turn on CNBC someone quotes Cisco’s John Chambers who recently opined that the global business environment is the best he has ever seen. Interestingly, he said the same thing in late 2000. About three months later he laid off thousands of workers. 

From 2000 Annual Report, Letter to Shareholders: In our opinion, the radical business transformations taking place around the world will accelerate, making the opportunities ahead of Cisco far greater than ever before. We believe that Cisco has the potential to be the most influential and generous company in history. We are in the fortunate position to be at the center of the Internet economy, and we recognize that although this position gives us confidence, we must balance this confidence with healthy paranoia. 

From 2001 Annual Report, Letter to Shareholders: Having said that, we recognize that fiscal 2001 was different and more difficult than any other year in our history. In fact, in many ways, it was like two different years. The first period, from August through December, started out even more positively than we could have anticipated with year-over-year revenue growth over 60 percent, while the second half became extremely challenging. We obviously would have liked to avoid the challenges we faced in reduced capital spending and the global macroeconomic environment, which resulted in the reduction in our workforce (note: approximately 6,000 regular employees) and inventory charges we announced. However, we are committed to being decisive, addressing issues quickly, and dealing with the world the way it is, not the way we wish it were. Now, as you would expect, we are moving forward with a focus on our customers and areas we can influence and control: market-share gains, growth opportunities in emerging markets, profit contribution, IP technology, and product leadership.